Judge sentences Chicago lawyer to 7 years in prison in $2.4 billion fraud

Chicago lawyer sentenced to 7 years in prison

NEW YORK — A Chicago lawyer was sentenced to seven years in prison Thursday by a federal judge who said his excessive loyalty to Refco Inc. led him to help the big commodities brokerage carry out a $2.4 billion fraud.

Attorney Joseph P. Collins, 59, of Winnetka, Ill., was sentenced by U.S. District Judge Robert P. Patterson in Manhattan after he was convicted at trial of conspiracy and other charges in the huge fraud at Refco.

Patterson cited Collins long history of charitable acts toward friends and his support of Chicago schools and the University of Notre Dame as he imposed a sentence considerably less than the 85 years in prison suggested by federal sentencing guidelines.

Patterson said the lawyer’s loyalty to a customer led him to his crimes.

“I don’t believe Mr. Collins committed these crimes for greed, for money,” Patterson said.

“I think this is a case of excessive loyalty to a client,” he said. “It’s an admirable thing but in this case seems to have caused the crimes to be committed.”

Patterson said it was necessary to give Collins a significant prison term as a message to lawyers that they can be held responsible if they are complicit in their client’s crimes.

He said he wanted “to deter other lawyers from doing this.”

Collins thanked his family and friends for their support before he was sentenced.

Assistant U.S. Attorney Chris Garcia said Collins played a major role in the fraud because he was held in high regard in the legal community as a partner at a top law firm. He said the respect he garnered carried weight with those with whom the company dealt.

“This defendant was a critical, critical player in one of the largest frauds this country has ever seen,” Garcia said.

The company in the mid-1990s sustained hundreds of millions of dollars of losses through losing trades and engaged in an elaborate campaign to cover them up, attracting the attention of federal authorities.

Refco, once the nation’s largest independent commodities broker, filed for bankruptcy in 2005, just weeks after going public and soon after revealing that a $430 million debt owed to the company by a firm controlled by Bennett had been concealed.

Before its fall, Refco was one of the world’s biggest commodities brokerages, employing some 2,400 employees in 14 countries.

Former Refco CEO Phillip Bennett is serving 16 years in prison after pleading guilty to conspiracy to commit securities fraud.